Multichoice Subscriber Management (Pty) Ltd and Tiscali (Pty) Ltd (72/LM/Sep04) [2005] ZACT 23; [2005] 1 CPLR 224 (CT) (20 April 2005)

Multichoice Subscriber Management (Pty) Ltd and Tiscali (Pty) Ltd (72/LM/Sep04) [2005] ZACT 23; [2005] 1 CPLR 224 (CT) (20 April 2005)

The Tribunal found that the relevant market for competition analysis is internet access services for home-based consumers, rather than segmentation by technology or premium/non-premium offerings. Although the merged entity would hold a significant share in a concentrated market, the presence of ongoing innovation, low barriers to entry, and the likelihood of new entrants mitigates the risk of anti-competitive effects. Exclusive retail distribution agreements were identified as a barrier to entry for smaller ISPs, and a condition was imposed requiring their termination. Vertical concerns regarding content exclusivity were dismissed, as the content was not unique, not exclusive, and not...

Citation
[2005] ZACT 23
Parties
Applicant: Multichoice Subscriber Management (Pty) Ltd; Respondent: Tiscali (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
20 April 2005
Case Number
72/LM/Sep04
Procedural Posture
Large Merger Review / Merger Clearance Decision
Outcome
Merger approved subject to conditions.
Judges
N. Manoim, D. H. Lewis, M. Madlanga
Legal Topics
Large Merger Review, Market Definition, Barriers to Entry, Vertical Integration, Public Interest Conditions
Competition Law Commercial and Corporate Large Merger Review Market Definition Barriers to Entry Vertical Integration Public Interest Conditions

Case Brief

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Parties

Multichoice Subscriber Management (Pty) Ltd

Applicant

Tiscali (Pty) Ltd

Respondent

Procedural Posture

Large Merger Review / Merger Clearance Decision

Legal Issues

  1. 1 Whether the merger between Multichoice Subscriber Management (Pty) Ltd and Tiscali (Pty) Ltd is likely to substantially prevent or lessen competition in the relevant market.
  2. 2 How the relevant market for internet access services should be defined for competition analysis.
  3. 3 Whether the merger raises significant horizontal or vertical competition concerns.

Ratio Decidendi

The Tribunal found that the relevant market for competition analysis is internet access services for home-based consumers, rather than segmentation by technology or premium/non-premium offerings. Although the merged entity would hold a significant share in a concentrated market, the presence of ongoing innovation, low barriers to entry, and the likelihood of new entrants mitigates the risk of anti-competitive effects. Exclusive retail distribution agreements were identified as a barrier to entry for smaller ISPs, and a condition was imposed requiring their termination. Vertical concerns regarding content exclusivity were dismissed, as the content was not unique, not exclusive, and not...

Court Disposition

Merger approved subject to conditions.

Orders

  • The merger between Multichoice Subscriber Management (Pty) Ltd and Tiscali (Pty) Ltd is approved, subject to the conditions set out in the annexure to this decision.
  • The merged entity must terminate exclusive distribution arrangements with retail customers to facilitate entry for smaller ISPs.